AVERAGE TICKET SIZE OF RESIDENTIAL UNIT DECLINES 14% Y-O-Y IN 2016:

Published Date : 10/03/2017

In the latest report from Cushman & Wakefield, it is observed that the ticket size of new launches across top eight cities saw an average decline of 14% year – on – year (y-o-y). This was a consequence of many developers recalibrating their market strategies that involved reducing effective cost of their property and restricted new launches in order to reduce their inventory holding. In majority of the cities, developers have sought to rationalize ticket sizes especially in the high-end and luxury segments, which has been hit the most.

In accordance with the market sentiments, the total number of new housing units declined during the year by 11% to approximately 113,000 units. Of this, mid housing segment accounted for 56% of the total unit launches followed by value housing segment at 32%. On a y-o-y basis, value housing segment noted an increase of 22% to more than 36,300 units. The high-end segment, on the other hand, was impacted the most, wherein launches almost halved to 12,000 units during the year.

[1] Value housing are units typically priced in the range of INR 2-5 million; values for mid segment are for units in the range of INR 5-10 million except Delhi-NCR and Mumbai, where the range in mid segment housing is typically between INR 5-17 million (20 million for Mumbai). High-end segment values are for units typically priced above INR 10 million except for Delhi and Mumbai (where it is more than 17 million in Delhi and 20 million for Mumbai)

Anshul Jain, Managing Director, India, Cushman & Wakefield,“The government has been resilient in its efforts to create affordable housing and achieve its target of ‘housing for all by 2022,’ and is taking steps to build in benefits for developers to participate. Post the demonetization, markets have witnessed a slow uptake of residential properties on account of price and value mismatch. Consequently, developers are also relooking at their strategies to create better value for home buyers. The clarity on affordable housing’s definition provided by the government in this year’s Union Budget along with the benefits accruing from the infrastructure status to affordable housing projects should bring in a spurt in new launches in the later part of the year, albeit these are most likely to be in suburban and peripheral locations.”

“In terms of projects that have already been launched and where units remain unsold, developers are offering discounts and schemes to decrease their inventory and these schemes will continue for a while till the markets finds a balance. Further, the ticket values of new units being launched may see some change this year, as many developers are working on lowering these to increase the affordability of their units by either offering attractive prices or smaller units. This, along with reduced bank loan rates are expected to create some velocity in the sales by the end of the year and going into the next year.”

MUMBAI: MID SEGMENT TICKET SIZE DOWN 14%; TOTAL LAUNCHES IN CITY UP 58%

The average ticket size of mid segment fell by 14% to INR 1.12 crores as developers focused more on offering apartments of smaller sizes, as well as launching projects at marginally lower prices. Average size of newly launched units in 2016 in Mumbai reduced by 10% to approximately to 960 sf. Further, developers launched mid segment projects in the western suburbs of Malad, Kandivali and Borivali, at lower-than-average prices, in order to push sales. Also, launches at Ulwe, Seawoods, Kharghar in Navi Mumbai during 2016 were at an average 5% lower than other established markets in the vicinity.

The value housing segment saw the ticket size increasing by 26% to INR 34 lakhs as demand in this segment remains strong. This was led by both, an increase in size as well as an increase in average launch price. Category B developers offered 1.5 and 2 BHKs in peripheral locations such as Panvel, Ambernath, Mira Road under the value housing segment category.

However, developers in Mumbai raced ahead to launch projects during the year, with some large projects launches by reputed developers in the city. Therefore, launches in the mid segment more than doubled to 18,700 units, while overall launches increased by 58% to 24,900 units.

BENGALURU: NEW LAUNCHES DOWN BY 42%; VALUE HOUSING SEGMENT’S TICKET SIZE DOWN 23%

Launch of new units in Bengaluru declined by 42% to 17,300 units during 2016, partly due to delays in receiving completion certificates on account BBMP’s drive to clamp down on encroached land and partly due to muted demand in the high-end and luxury segments, as well as anticipation of new rules under RERA, which has forced developers to postpone new launches. Only the value housing segment saw a surge – up 21% as 6,460 units launched during the year.

The value housing segment in Bengaluru witnessed a 23% decline in ticket size of new launches to INR 39 lakhs, mainly due to lower sizes offered by developers, to push sales in the market. The average unit size declined 19% to 1,000 sf during 2016, while the average launch price fell 5% to INR 3,800/sf. Locations of Sarjapur and Bommasandra in south, accounted for 34% of total value housing launches in south and south-east in 2016 as they offered relatively smaller units.

All segments in Delhi-NCR witnessed a drop in ticket size in 2016 owing to slow sales velocity and subdued market sentiments. The steepest drop was seen in the high-end segment wherein ticket size of newly launched units in 2016 declined by 62% to INR 2.5 crores. The drop in ticket size came on the back of lower average launch prices, as well as smaller sizes of units launched. During the year, developers launched projects at relatively less-expensive locations in Noida and Greater Noida, as compared to 2015 when launches were seen in more premium locations of Golf Course Road & Golf Course Extension Road. This resulted in the average launch price declining 40% at INR 9,000/sf during 2016. Overall, the average size of newly launched units too declined by 37% INR 2,800 sf, which brought down the average ticket size.

The value housing segment’s ticket size dropped 17% to INR 36 lakhs in 2016. The fall in average ticket size comes primarily due to lower average unit size of 1,200 sf.

Overall, launches in Delhi-NCR declined 52% to 11,400 units during 2016 as the region continues to reel under subdued sales velocity and piling up of unsold inventory. Have emerged as an investor-driven market in the last few years, Delhi-NCR has been one of the most impacted regions in the ongoing slowdown of residential market.

The average ticket size in the value housing segment dropped by 25% in 2016 to INR 18 lakhs. This was primarily led by a 24% drop in average unit size to 731 sf, as developers preferred to reduce unit sizes, rather than rationalizing the average launch price. Also, launch of some large projects in relatively far-flung areas of Hatisala and Baruipur during the year, contributed to the quantum of launches doubling in the value housing segment. Overall, total unit launches in Kolkata declined 13% to approximately 13,000 units as the Kolkata market has seen subdued activity over the years, further exacerbated by demonetization.

PUNE: VALUE HOUSING AND MID SEGMENT RESILIENT; TOTAL LAUNCHES UP 14%

In Pune, overall launches rose by 14% to 18,700 units in 2016, with the ticket sizes in value housing and mid segment rising slightly, as these segments in Pune market were comparatively more resilient to the ongoing slowdown in sales, as compared to other markets. Launches rose 20% in the value housing segment to 8,600 units with stable demand driven by end-users. In the value housing segment, average ticket size too rose 10% in 2016 to INR 30 lakhs, led by higher launch prices of some projects in the city. Some projects in Hinjewadi and Bhugaon were launched at a higher rate, as compared to last year. Moreover, the year also witnessed launch of value housing projects in Hadapsar, Kondwa, Lohegaon, which typically command higher prices.

Ticket size in the high-end segment has taken a hit with launches falling a massive 88% and the average ticket size almost halving. During the year, the average ticket size too almost halved to INR 1.1 crore as developers significantly rationalized unit size to 1,400 sf from 2,600 sf last year. Only 3 projects were launched during the year in locations of Mulshi and Pashan as developers saw the impact of slowing sales in this segment.

AHMEDABAD: AVERAGE TICKET SIZE OF HIGH END SEGMENT FALL 40%

The average ticket size of the high end segment fell by 40% to INR 1.09 crores, majorly due to a drop in average unit sizes. While the average launch price fell 5% to INR 4530 /sf/month, the average unit size declined 37% to 2,411 sf. Majority of the high-end segment units were launched in locations such as Bhopal and Prahladnagar, as against launches in Thaltej and Nehrunagar in 2015, where typically larger sized units are launched.

Total launches in the city rose 43% to 11,800 units during 2016. Majority (67%) of the new residential launches in the city are located in the western quadrant due to the close proximity to the office markets of Madhapur, Hi-tech city and Gachibowli, and better connectivity to other parts of the city. Developers are focused on the mid-segment as the demand by IT-BPM employees in this segment is more. As a result, launches in the mid segment rose three-folds to approximately 9,800 units. However, due to demonetization move in the last two months of 2016, developers focused on completing their existing projects rather than launching the new projects. In Hyderabad, the average ticket price of new launches in the value housing segment rose by 41% to INR 40 lakhs in 2016, led by both an increase in average unit size and higher average launch prices. The average launch price rose 6% to INR 2,650 persf in 2016, as developers launched some projects at higher prices. However, majority of the increase in ticket size was led by the higher average unit size, which rose 33% to 1,500 sf.

The value housing and mid segments in the city are witnessing stable demand created by the salaried employees from the IT-BPM sector. Hyderabad’s housing market has been relatively resilient owing to strong end-user demand, trickling down from the traction seen in the commercial office segment. Moreover, until 2014 the city’s housing market, saw low prices owing to political instability in the state. The market has started picking up traction from 2015 post the bifurcation of the state.

Overall in 2016, launches in the city have been impacted by political uncertainty. As a result, total launches in the city fell by 31% to 6,400 units during 2016.The ticket size of launches in the mid segment witnessed an increase of 40% in 2016 to INR 81 lakhs. This surge in ticket size was primarily led by developers launching projects at higher prices during the year. The average launch price rose 33% to INR 6,170 /sf. The increase was led by higher quantum of units launched in core areas such as Vadapalani, Anna Nagar West, Nungambakkam, MRC Nagar and Velachery, which typically command higher prices. In the high-end segment, the average ticket size declined by 24%. The average unit size of the newly launched units declined 14% to 1,820 sf. Most of the launches were witnessed in Vadapalani and RA Puram locations.